COMMISSIONER OF INCOME TAX v. MANDSOUR FERRO ALLOYS LTD
[Citation -2006-LL-0220-1]

Citation 2006-LL-0220-1
Appellant Name COMMISSIONER OF INCOME TAX
Respondent Name MANDSOUR FERRO ALLOYS LTD.
Court ITAT
Relevant Act Income-tax
Date of Order 20/02/2006
Assessment Year 1993-94
Judgment View Judgment
Keyword Tags business expenditure • legal obligation • tax effect
Bot Summary: Whether the Income-tax Appellate Tribunal was justified in setting aside of an order passed by the Commissioner under section 263 of the Income-tax Act without giving any finding mush less categorical finding as to how and on what basis the case of the assessee falls in the excepted categories as defined under section 40A(3) read with clause of rule 6DD of the Income-tax Rules, 1962 2. In an order of reversal, was it not obligatory upon the Tribunal to have given a categorical finding of fact that the assessee has satisfied the requirement of the concerned section i.e., section 40A(3) read with clause of rule 6DD of the Income-tax Rules, 1962, by giving cogent explanation thereby disentitling the Commissioner from invoking the provisions of section 263 and holding it to be a case prejudicial to the interests of the Revenue Heard Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the appellant and Shri G. M. Chafekar, learned senior counsel with Shri D. S. Kale, learned counsel for the respondent. A perusal of the aforequoted paragraph which is the total discussion made by the Tribunal on the issue to say the least can never be regarded as a judicial finding recognized in law. Coming to the facts of this case, what we notice is that the Tribunal having taken note of the facts involved in the case in earlier paragraphs of the order summed up the issue against the Revenue in paragraph 3 quoted supra and allowed the appeal filed by the assessee by setting aside the order passed by the Commissioner of Income-tax. In a case of reversal, it is all the more necessary to record the dissent as to why the Tribunal does not agree with the finding of the lower appellate authority i.e., the Commissioner of Income-tax and then give their own reasoning. As a consequence and keeping in view the facts involved, we remand the case to the Tribunal for again deciding the appeal afresh within six months on the merits keeping in view the aforementioned observations. Parties to appear before the Tribunal on March 20, 2006, so as to enable the Tribunal to decide the appeal as directed.


JUDGMENT judgment of court was delivered by A. M. Sapre J. This is appeal filed by Revenue (Commissioner of Income-tax) under section 260A of Income-tax Act, 1961, against order dated July 20, 2000, passed by Income-tax Appellate Tribunal (for brevity hereinafter referred to as Tribunal ) in I. T. A. No. 264/Ind/98. This appeal was admitted for final hearing on following substantial question of law: 1. Whether Income-tax Appellate Tribunal was justified in setting aside of order passed by Commissioner under section 263 of Income-tax Act without giving any finding mush less categorical finding as to how and on what basis case of assessee falls in excepted categories as defined under section 40A(3) read with clause (j) of rule 6DD of Income-tax Rules, 1962? 2. In order of reversal, was it not obligatory upon Tribunal to have given categorical finding of fact that assessee has satisfied requirement of concerned section i.e., section 40A(3) read with clause (j) of rule 6DD of Income-tax Rules, 1962, by giving cogent explanation thereby disentitling Commissioner from invoking provisions of section 263 and holding it to be case prejudicial to interests of Revenue? Heard Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for appellant and Shri G. M. Chafekar, learned senior counsel with Shri D. S. Kale, learned counsel for respondent. At outset, we are constrained to observe manner in which Tribunal decided issue involved in this appeal in impugned order in paragraph 3: We have carefully considered submissions of rival parties, facts of case and have perused documents filed before us. We find that on both issues, Assessing Officer had raised specific queries and accordingly, assessee had also furnished all details required by Assessing Officer from time to time. Therefore, we do not agree with order of learned Commissioner of Income-tax that Assessing Officer had passed order without calling for requisite details and without examining issues. Therefore, order of Commissioner of Income-tax holding order of Assessing Officer as erroneous and prejudicial to interests of Revenue cannot be upheld and same is accordingly set aside. perusal of aforequoted paragraph which is total discussion made by Tribunal on issue to say least can never be regarded as judicial finding recognized in law. Time and again, judicial precedents have reminded Tribunal that they being last court of facts in hierarchical system, it is their legal duty rather legal obligation to deal with and discuss issues of fact in detail and then give categorical finding for their eventual conclusion. casual approach while deciding issue exhibits non-application of mind. It is much more so when factual finding recorded by Commissioner of Income-tax (Appeals) is assailed specifically by appellant in appeal on facts. It must appear from order that sincere efforts were made to go into factual arena and then keeping in view legal position applicable to facts of case, categorical finding is recorded by Tribunal. This court exercising appellate powers under section 260A of Act cannot travel in facts, nor can it appreciate factual evidence. It is for this reason, it gives weightage to factual finding recorded by Tribunal on any issue relating to facts which have travelled up to Tribunal from Assessing Officer and Commissioner of Income-tax (Appeals). Coming to facts of this case, what we notice is that Tribunal having taken note of facts involved in case in earlier paragraphs of order summed up issue against Revenue in paragraph 3 quoted supra and allowed appeal filed by assessee by setting aside order passed by Commissioner of Income-tax (Appeals). In case of reversal, it is all more necessary to record dissent as to why Tribunal does not agree with finding of lower appellate authority i.e., Commissioner of Income-tax (Appeals) and then give their own reasoning. issue involved in this case has large tax effect either way, if answered against Revenue and in favour of assessee or vice versa. In short, question relates to amount of Rs. 43,15,849, namely, whether it can be allowed by way of business expenditure during whether it can be allowed by way of business expenditure during assessment year 1993-94 or not, to assessee as claimed. It needs to be examined in depth on facts and then finding about its bona fide and genuineness of transactions etc. need to be recorded by Tribunal. We are constrained to observe that Tribunal while allowing appeal filed by assessee did not undertake any such judicial exercise and simply proceeded to allow appeal by granting benefit. We cannot countenance such approach. It is neither legal nor proper. Accordingly and in view of foregoing discussion, we allow appeal and set aide impugned order. As consequence and keeping in view facts involved, we remand case to Tribunal for again deciding appeal afresh within six months on merits keeping in view aforementioned observations. Needless to say, we do possess power to remand case under section 260A ibid and in this case, case for remand is called for. Parties to appear before Tribunal on March 20, 2006, so as to enable Tribunal to decide appeal as directed. No costs. *** COMMISSIONER OF INCOME TAX v. MANDSOUR FERRO ALLOYS LTD.
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